After dismal earnings, eyes are on Nokia World in September

Hopes are for a Windows Phone 8 Lumia launch at Nokia's trade show

Nokia's dismal earnings report announced Thursday has left smartphone industry observers looking for better news at the Nokia World conference Sept. 5-6 in Helsinki.

There are hints that Nokia could launch Windows Phone 8 on its Lumia smartphone line at the event. A banner outside Nokia's flagship store undergoing renovation in Helsinki seems to mark the re-opening of the store with something big, using the words, "Something amazing is coming" on Sept. 7.

A picture of the banner is recorded on the My Nokia Blog, posted Wednesday.

There are further references to a "Nokia Graffiti" website that suggests returning next week to find out more about what's coming.

It could be that Nokia is only directing customers to its renovated Helsinki store, but analysts say something bigger involving Windows Phone could be in store for early September.

Earlier Thursday, Nokia reported a 39% drop in the number of smartphones it sold in the second quarter, to 10.2 million, compared with the same quarter last year.

CEO Stephen Elop called the second quarter a "difficult" one. At the same time, Elop said Lumia smartphone shipments in the second quarter reached 4 million units, adding: "We believe the Windows Phone 8 launch will be an important catalyst for Lumia."

Lumia phones are sold by both T-Mobile USA (the Lumia 710) and AT&T (the Lumia 900). Both phones run Windows Phone 7.5 and will get an interim upgrade to Windows Phone 8 (WP8) with WP7.8. Because the phones have single-core processors, they can't be upgraded to WP8 for optimal video and graphics performance, analysts have said.

Strategy Analytics said smartphones running the Windows Phone operating system captured 3% of the U.S. market in 2011, and will rise to 4% of the 123 million smartphones sold in the U.S. in 2012. Nokia, HTC and Samsung all make devices using Windows Phone.

Neil Mawston, executive director of Strategy Analytics, called Windows Phone a "niche" product, and said "breaking the stranglehold of leaders Android and Apple will not be easy."

He said WP8 needs to support multicore processors and should run on an expanded number of smartphone models from Nokia and others cellphone makers.

Jeff Kagan, an independent analyst, said Nokia's second-quarter report and Windows Phone's niche share of the smartphone market continue to be disappointing. "We hoped Nokia's partnership with Microsoft would help them restart their engines. It didn't," he said.